A Year of the Gig Economy

A year and a month ago I posted twice about something existing on a small scale for as long as anyone could remember, but had only recently been given a name and drawn a flurry of discussion.  The “gig economy,” or the offering and working of individual and often very short tasks or sets of tasks, seemed to be gaining a new credibility.  I commented that although taking such small-scale employment was clearly an economic inferior good, it offered both experience and the chance to earn money without being held off by minimum wage laws.  Since then, it has continued without as much attention – but what has been said about it when it has reached print?

On June 4^th, Jonathon M. Trugman expressed his displeasure about this phenomenon in New York Post (“This new ‘gig’ economy isn’t helping anyone”).  He didn’t really support the title in the article, which stated that “temporary gig work is better than no work at all,” but did tell us, sadly, that the net new number of American temporary positions added from 2005 to 2015, 9.4 million, exceeded that time’s overall jobs increase, 9.1 million.  That movement away from permanent positions is the real trend, and is disturbing enough, but hardly means that other opportunities are worthless.

A more balanced view turned up in CNN Money (“Millions in gig economy can’t find better jobs or pay,” October 27), which acknowledged both the advantages and disadvantages I named above.  The statistics here, apparently invoked to be negative, almost served the other side better; although “nearly 30% of gig workers who work part-time would prefer a full-time job,” that number could be much higher, and it is redundant to say that three-quarters of “these part-timers” have low incomes. 

What’s interesting about “Rigging the gig economy:  A proposed bill would lure freelance workers to sign away their employee rights for cash” (Salon, November 29^th), is that it sought to make one politically liberal point, failed, and in the process unintentionally put forth cases for two others.  It related a proposed legislative bill that would either mandate, or allow participation in, a scheme where companies would subsidize gig workers’ health care at an amount equal to 2.5% of their income, in exchange for them agreeing to “accept their classification as nonemployees.”  That’s not a large bonus, but it is significant, and, if they are legally not on their companies’ payrolls, it costs them nothing.  The two true improvements it supported were strict, well-enforced worker-favoring laws on what constitutes a contractor as opposed to an employee, and national health insurance unconnected to income sources.

It was months later before anything more on this subject crossed my desk, and it was on the April 10^th New York Times editorial page.  “The Gig Economy’s False Promise” properly debunked what the editorial board called “the promises Silicon Valley makes about the gig economy,” namely the illusions of entrepreneurism and independence, and the idea that “use of the independent contractor model is in fact better for workers.”  The problem here is that as an inferior good, gig jobs, taken mostly when permanent ones are unobtainable, do not hurt those who have them.  As shabby and misleading as these positions can be, the permanent jobs crisis, not those offering them, deserves the blame. 

Most recent was “Is the gig economy working” (New Yorker, May 15).  This long, long form piece (it printed out to 24 pages) used a combination of stories, statistics, and interviews to assess where this form of work might be going.  Its angle, as its subtitle put it, “many liberals have embraced the sharing economy.  But can they survive it?”, surprised me, as I had thought of the gig economy as having mostly conservative appeal, since it facilitates free-market transactions while requiring workers to defend their own interests without regulatory protection.  Author Nathan Heller, though, said some called it “the power to control one’s working life,” with gigs offering a chance for employment to “return, grassroots style, to the people.”  He interviewed some who earned money through TaskRabbit and Lyft, who were actually only choosing the ancient, big-city combination of side work financing primary efforts in creative projects that may or may not sell, and contrasted the reality of such jobs with Uber and Airbnb promotional material.  After much more thought, analysis, and conflation of pure gig opportunities with sharing-economy ones, he came around to the independent-contracting and health-coverage issues above, and concluded with a worker, with whom he started the story, finishing a group of handyman tasks and saying “the gig economy is such a lonely economy.” 

Through these different viewpoints, the real significance of gig work is clear.  First, it is not as good as regular employment.  Second, it is necessary for its participants to be aware of their true after-expenses earnings.  Third, however, to call it harmful or somehow immoral is to make the same mistake as condemning foreign sweatshops or a lower minimum wage, as if laborers under those circumstances would be better off without the best opportunities they can find.  That is “let them eat cake,” a philosophy for which, in any labor market, let alone during a permanent jobs crisis, we can have no use.